Are you being served?

The more companies spend on service delivery, the less consumers are satisfied. To bridge the yawning gap between what the customer wants and what they get businesses need new strategies. Jane Lewis reports.

“If you’d like to leave a message press one. To be left on hold and plunged into a silent telephonic abyss press two. To listen to a tinny version of Greensleeves press three. To be transferred to our understaffed call centre where our operators are too busy to take your call press four. To speak to an operator who is very nice but no help at all press five. To be cut off for no apparent reason …”

If this recent advertisement for KitKat strikes a chord with your own experience of customer service in Britain, you are not alone.

The call centre experience – so often unsatisfactory – has come to represent what is now recognised as a yawning gap between our expectations of the kind of service we are entitled to and what is actually being delivered.

As the 21st century unfolds it is clear that most people accept that service will play an increasingly important part in the economy. As we get richer, so our appetite for services seems to be almost unlimited. Yet authoritative surveys show that the more companies spend on service delivery, the less their users or consumers are satisfied. It represents a worrying and potentially very expensive puzzle.

The recent formation of the Institute of Customer Service, a body dedicated to elevating service to the status of a respected profession, is evidence that this is an issue that companies are beginning to take very seriously. Given the bearing that good customer relationships might have on their future competitiveness, this is hardly surprising.

At a time when the marketable differences between products per se are diminishing very rapidly, the level of customer service backing them up is set to become an important differentiator in its own right.

Indeed some commentators, including the institute’s Paul Cooper, maintain that in some sectors service is set become the main purchasing criterion.

“When we buy something we have to make our judgement as much on the customer service as we do on the product.

“The problem is that you usually only find out how bad somebody’s customer service is after you’ve bought,” he says.

Near miracles

But as Cooper points out, the combination of high-tech systems and well-trained, responsible staff can result in “superb” results for those organisations that get the formula right. The statistics show over and over again how very much more expensive it is to find new customers compared to keeping the ones you’ve already got,” he says.

And professional customer service can bring about near miracles in terms of transforming complainant groups into dedicated customers for life.

“Those that have woken up to this have stolen a major competitive market,” Cooper says. “It’s terribly difficult for companies to catch up with something like customer service because it’s very intensive from a time point of view.

“It can take three or four years to turn a company around. So those that started two or three years ago have a very strong lead.”

The real problem, of course, lies in how you go about achieving this transformation. While staff training is clearly important, there is clear evidence that something more intangible – in terms of overall attitudes – is marking the winners from the losers. This is apparent in call centres themselves. Contrary to the prevailing status quo, the best operatives are not those that have been trained to stick to the rule book, so much as those with equipped with the self-belief and autonomy to believe in their own competencies.

“The biggest problem you can come against in some companies is to get rid of rules that stop [operatives] being able to use their own personality,” Cooper claims. Thus it is more a question of fostering an overall company attitude that fosters good service.

“I think much of the responsibility for this falls at the feet of the boardroom. They have to realise there’s a lot of money that needs to be spent,” he says. “But it’s much more about attitude, about the development of employee satisfaction and the realisation that this is where good customer service is going to come from.”

Christopher Hobden, a partner specialising in service delivery at management consultancy Bain & Co, agrees that recruiting and training customer specialists is a real difficulty for companies. Yet he also points out that many organisations are continuing to fall at the first hurdle when it comes to providing good service – few have the gift of seeing themselves as their customers see them.

More important, many are unable to recognise exactly who their customers are, and what they actually want. Indeed, making the wrong assumptions about what drives customers has led to some interesting discrepancies in service provision.

Individualised customer

“For example, one company told us they used to recruit people who were good at mental arithmetic, because that’s what they thought their customers wanted. In fact, they needed people who could take responsibility for solving their customers’ problems – and that’s much broader than just being good at mental arithmetic,” Hobden says.

But the biggest change in the way those at the forefront of the revolution are handling their client bases has come in the realisation that not all customers are the same. In fact, the ability to segment – to identify key customer groups and discard others – has been a leading factor in the strategies of many newer organisations.

Hobden points to the example of airlines such as EasyJet and BA’s Go. “There is a huge disparity between the traditional airlines and [these new operators]. What they have done is to figure out which customers are most valuable to them and what those customers want. They then set out to provide the appropriate level of service for their chosen customer bases.”

In this instance, that means fewer frills, lower prices and the guarantee of getting from A to B with the minimum amount of hassle.

Hobden believes the chief mistake many organisations make is trying to cater for too wide a customer base. “They cannot expect to be good at serving all customers.”

Indeed, future winners will be marked out less by their ability to appeal to a wide range of customer types and more by their skill at providing an appealing range of services to specific groups.

“In the future any buyer of a product or service should be able to find an organisation that is setting out to attract him in particular – and therefore offering the type of combined product and service which that individual is looking for,” Hobden says.

But the process of shedding “unwanted” customers, or re-educating them to fit a new company direction, is far from pain-free, as Barclays Bank found to its cost earlier this year when it embarked on a programme encompassing the planned closure of some 171 rural branches.

With what can only be described as unfortunate timing, the bank simultaneously ran a high-profile ad campaign in which Hollywood big shot, Anthony Hopkins, extolled its virtues as a “big, big bank”.

Barclays’ director of consumer and community affairs Martin Moseley admits the reaction from the public “was not a happy one… we will certainly have learned lessons from recent experiences”.

The bank did try to redress the situation via a programme of customer education as to why it was making the move, and how customers could themselves benefit from moving into a more ATM/Internet-centric banking environment.

“I personally went to a number of meetings in communities to explain in some great detail. After those meetings, there was a strong understanding of why we had to do it. But the timing, I hasten to add, was never going to be easy,” he says.

Nonetheless, Moseley maintains that even a PR debacle of this magnitude can be turned to a company’s advantage.

“We face a significant number of customer complaints but out of those complaints come service improvements. We actually encourage complaints because it’s a real way of testing the temperature of the water with customers.”

But even when companies are committed to the notion of providing enhanced customer service, many face a dilemma when it comes to actually following through on these proposals, as Michael Wilmot of the think-tank Future Foundation points out. The problem is that investing in customers is not a strategy that immediately shows up on the bottom line and can thus have serious ramifications on how market values are perceived.

“Shareholder value often works against the idea of customer focus,” he says. “Giving better service to a customer costs money, and it can only be justified if ultimately revenues come in.

“But obviously the costs normally come first and the revenues later. It requires companies to take rather a bold and longer term view about their position and their competitive advantage in the medium term, rather than the immediate short term.”

The refusal of some organisations to bite this particular bullet might be one reason why the notion of “customer service” has already gained such a dire reputation in certain sectors, most notably in the former public utilities and the NHS. While these organisations will willingly talk the talk, they won’t actually walk the walk, claims Wilmot.

Service as servitude

“The trouble is that they are still not driven by customer focus. They have called them customers but they don’t treat them like customers. It’s still the case that if you go to the hospital, you know you have to wait. In a truly customer-focused commercial organisation you couldn’t do that and survive,” he says.

But a secondary reason why many organisations find it so hard to go wholesale down this route is that empowering customers, by definition, is likely to have serious ramifications on the prevailing power structures.

“The problem is that the model I’m proposing – basically companies run for the consumer – is threatening [to senior management]. It’s because consumers now drive the business because they say what’s needed,” says Wilmot.

“All management is doing is responding to what the customers say, so it’s not surprising that people feel threatened by that. And you have structures in these organisations which were built for a different world, different sorts of markets and different sorts of consumers. They have to change that.”

One public-sector organisation which has responded to this challenge is the East London Borough of Newham, which is concentrating on the quality of its service as a means of encouraging people to stay and live in the borough.

The council’s assistant chief executive in charge of strategic human resources and development, Eata O’Donovan, describes a dual-pronged approach to the issue which majors on both technical and human skills.

In tandem with a new call centre which aims to provide citizens with immediate detailed information on any area of concern, the council has instituted a series of local service centres dotted around the borough.

“That means that people who don’t have a phone, or who don’t feel confident on the phone, can get to a council office much more quickly. And that facilitates a greater dialogue between the customer and the council,” says O’Donovan.

Despite the importance of “soft” communication skills in customer-fronting staff, IT also plays an important part, she explains. “We don’t want staff to feel exposed. They’ve got very good IT and, if they face an issue, they can immediately connect with the back office and get the information so that the person goes away satisfied then – rather than, say, in three weeks time.”

She rejects the notion that this might be a dangerous step in terms of raising customer expectations of service to unreasonable levels.

“I would be very reluctant to inhibit any individual or public’s right to be demanding of service. What you hope is that you engage them more in a really open dialogue – that they will begin to appreciate the complexities of what you are doing. That is really the future of democracy, because if people understand more, they’ll contribute more.”

Nonetheless, many commentators believe that the UK continues to lag behind other societies, most notably the US, when it comes to understanding what real customer service means.

Nigel Barlow, a consultant specialising in inspiring organisations to improve their service – and author of Batteries Included, Creating Legendary Service – claims this is largely down to a continuing “Upstairs Downstairs hangover.”

Too often in this country, he claims, the notion of providing service is associated with a kind of ritual humiliation. “I think it is because we think of service as servitude. There is almost a ritual dance where the server has to establish that they’re socially and intellectually your equal – and only then will they deign to serve you.”

This might explain several national “service” traits which invariably prove more uncomfortable than reassuring – most notably the ubiquitous “Are you enjoying your meal?” when you’ve just taken the first mouthful. Consequently, Barlow also advocates throwing out the rule book when it comes to defining what constitutes good service.

Discover your own legend

“If there is a rule it should be not to copy others – this has been a great mistake.

“There has been a rise in business of what’s called benchmarking. If it’s done well, it means stealing good ideas from others. But you’ll find many companies trying to compare themselves with others who are equally mediocre or average. You have to discover your own legend.”

A new breed of operation is attempting to do precisely that. Ten UK (Ten standing for time, energy, network) describes itself as a “pure” service company.

Its remit, explains founder Alex Cheetle, is to act as a butler, concierge – almost a spouse – rolled up into one telephone service. “A lot of it is the everyday stuff that needs doing every week or month. We organise plumbers, electricians and flights; check insurance and get cars MOT’d. But we do the occasional big one-off as well.”

The essence of the service is to put customers, or members, first – and that means investing heavily in staff, particularly given the personal nature of many of the services provided.

“Our people need to be empowered to have that relationship of trust with members. They need to be motivated, they need to be loving what they’re doing and be able to make decisions,” Cheetle says.

“We actually went out there and chose the most difficult people we could imagine when we set up business – we chose American corporate lawyers. We thought that if we could make American corporate lawyers happy, we’d have a good business.”

• This is an edited extract from Radio 4’s In Business programme. The next series begins on 21 September.